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Disaster Assistance Loan Program Changes to Maximum Loan Amounts and Miscellaneous Updates rule (2023)

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The Disaster Assistance Loan Program Changes to Maximum Loan Amounts and Miscellaneous Updates rule is a significant rule issued by the U.S. Small Business Administration (SBA) effective July 31, 2023, that amended regulations for the Disaster Assistance Loan Program, increased options and support for disaster relief, and made adjustments for inflation. SBA issued the rule pursuant to its authority under the Small Business Act.[1]

HIGHLIGHTS
  • Name: Disaster Assistance Loan Program Changes to Maximum Loan Amounts and Miscellaneous Updates
  • Action: Final rule
  • Type of significant rule: Other significant rule

    • Timeline

    The following timeline details key rulemaking activity:

    Background

    The Small Business Administration's (SBA) Disaster Assistance Loan Program gives low-interest, long-term loans to homeowners, renters, businesses, and nonprofits who are recovering from disasters, such as natural disasters or the COVID-19 pandemic. SBA cited rising inflation rates and property (and property repair) costs as necessitating increased lending limits, longer initial deferment periods, and greater access to loans. SBA promulgated the Disaster Assistance Loan Program Changes to Maximum Loan Amounts and Miscellaneous Updates rule to keep up with inflation, according to the rule. [1]

    Summary of the rule

    The following is a summary of the rule from the rule's entry in the Federal Register:

    “

    The U.S. Small Business Administration (SBA or Agency) is amending various regulations governing SBA's Disaster Loan Program in order to expand options for disaster loan recipients as well as reflect the impact of inflationary increases over time that result in higher costs. These changes, including the increase to the home loan lending limits, the extension of the deferment period and the expansion of mitigation options, are intended to increase disaster survivors' access to obtain needed disaster loan funds for the repair or replacement of a damaged property. The changes are overdue and necessary due to increased costs related to construction and labor, as well as increases in property valuations that have occurred over time.[1][2]

    		”

    Summary of provisions

    The following is a summary of the provisions from the rule's entry in the Federal Register:[1]

    “

    In this direct final rule, SBA is increasing the lending limits applicable to home loans, including the limits on amounts for repair and replacement of disaster damaged real and personal property, for refinancing, for mitigation, and for contractor malfeasance. These changes are necessary as current home loan lending limitations have not been adjusted since 1994 and are insufficient to meet the needs of many homeowners and renters. SBA has determined that these increases are necessary due to inflation and higher costs for real and personal property repairs. These increases address the need for periodic adjustments in loan limits based on increases in home costs, the cost and availability of construction materials, and significant changes in labor costs. The current limits, established in 1994, are inadequate to compensate many disaster survivors for the costs associated with rebuilding, replacing and repairing their homes and household effects which have been lost or damaged as a result of a disaster. Housing prices have risen significantly over the past 25 years.
    ...
    SBA is also increasing the initial deferment period from 5 months to 12 months, which reduces the immediate financial burden for disaster survivors. Repair and replacement timelines often extend beyond the existing 5 months permitted for deferment. This creates the responsibility and burden for a disaster survivor to begin making payments before their property is completely restored and all-in costs accounted for. Further, SBA is revising its regulations to allow the SBA Administrator to increase the maximum loan amounts to homeowners and renters under a specific disaster declaration based on appropriate economic indicators, such as current building costs, regional median home prices, and the Consumer Price Index (CPI) and the Producer Price Index (PPI) for the region(s).
    ...
    Finally, SBA is making other revisions that will increase access to disaster loans and that clarify existing requirements, as further described below in the section-by-section analysis.[2]

    		”

    Significant impact

    See also: Significant regulatory action

    Executive Order 12866, issued by President Bill Clinton (D) in 1993, directed the Office of Management and Budget (OMB) to determine which agency rules qualify as significant rules and thus are subject to OMB review.

    Significant rules have had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. Executive Order 12866 further defined an economically significant rule as a significant rule with an associated economic impact of $100 million or more. Executive Order 14094, issued by President Joe Biden (D) on April 6, 2023, made changes to Executive Order 12866, including referring to economically significant rules as section 3(f)(1) significant rules and raising the monetary threshold for economic significance to $200 million or more.[1]


    The text of the Disaster Assistance Loan Program Changes to Maximum Loan Amounts and Miscellaneous Updates rule states that OMB deemed this rule significant, but not economically significant:

    “ The Office of Management and Budget has determined that this rule is a 'significant regulatory action' under Executive Order 12866.[2] ”

    Text of the rule

    The full text of the rule is available below:[1]

    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 Federal Register, "Disaster Assistance Loan Program Changes to Maximum Loan Amounts and Miscellaneous Updates," January 17, 2024.
    2. ↑ 2.0 2.1 2.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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